Manuscript received 20.11.09; final version received 20.11.09.
IDENTITY IN A SECOND-PRICE SEALED BID AUCTION: AN EXPERIMENTAL INVESTIGATION
Article first published online: 16 DEC 2010
© 2010 The Author. The Manchester School © 2010 Blackwell Publishing Ltd and The University of Manchester
The Manchester School
Special Issue: Product/Process Innovation and Market Structure
Volume 79, Issue 1, pages 159–170, January 2011
How to Cite
SHAHRIAR, Q. (2011), IDENTITY IN A SECOND-PRICE SEALED BID AUCTION: AN EXPERIMENTAL INVESTIGATION. The Manchester School, 79: 159–170. doi: 10.1111/j.1467-9957.2010.02188.x
- Issue published online: 16 DEC 2010
- Article first published online: 16 DEC 2010
Identity is a person's sense of self, derived from her membership in a group. Previous experimental studies have shown that people take more favorable actions toward the members of their own group (in-group favoritism). This paper proposes a simple model of identity to capture this in-group favoritism in a private-value second-price sealed bid auction and reports the result of an experiment designed to test the predictions of the model. Consistent with the predictions, the data reveal that bids and seller revenue are higher when the seller belongs to the same group as the buyers compared with when the seller belong to a different group.